Dollar index trims losses but remains under pressure

Investing.com –

Investing.com – The dollar trimmed earlier losses against the other major currencies on Tuesday, but the greenback remained under pressure as downbeat manufacturing data from the New York area added to concerns over the strength of the U.S. economic recovery.

In a report, the Federal Reserve Bank of New York said that its general business conditions index decreased to 7.8 this month from a reading of 10.0 in January. Analysts had expected the index to dip to 8.5 in February.

Separately, the National Association of Home Builders said its Housing Market Index decreased to a four-month low of 55.0 this month from 57.0 in January. Analysts expected the index to rise to 58.0 in February.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.14% to 94.32.

The euro remained higher against the dollar, with EUR/USD rising 0.32% to 1.1390.

The euro found support after the ZEW Centre for Economic Research said that its index of German economic sentiment rose by 4.6 points to 53.0 this month from January’s reading of 48.4. It was the highest reading since February 2014, but was still below expectations of 55.0.

But investors remained cautious as Greece’s current €240 billion bailout is due to expire at the end of the month and the new Greek government does not want it extended. Athens rejected a proposed six-month extension of the bailout on Monday, calling it “unacceptable”.

Athens has until Friday to request an extension otherwise its bailout will expire on February 28 and the country will run out of money.

The clash between Greece and its creditors has sparked fears that it could trigger the country’s exit from the euro zone. The European Central Bank was to decide whether to suspend emergency financial support for Greece later in the day.

The pound edged lower against the dollar, with GBP/USD down 0.30% to 1.5319.

In a report, the U.K. Office for National Statistics said the rate of consumer price inflation decelerated to 0.3% last month from 0.5% in December, broadly in line with market expectations.

Month-over-month, consumer price inflation declined 0.9% in January, compared to expectations for a drop of 0.8% and after holding flat in December.

Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a rate of 1.4% last month, up from 1.3% in December and above forecasts for a reading of 1.3%.

Elsewhere, USD/JPY gained 0.48% to trade at 119.05, while USD/CHF edged up 0.18% to 0.9337.

The Australian and New Zealand dollars were higher, with AUD/USD adding 0.29% to 0.7793 and NZD/USD easing up 0.09% to 0.7509. In the minutes of its February policy meeting, the Reserve Bank Australia earlier said that it cut rates this month due to the deteriorating economic outlook.

Meanwhile, the Canadian dollar remained higher, with USD/CAD sliding 0.26% to 1.2434 even as Statistics Canada reported that foreign securities purchases dropped by C$ 13.55 billion in December, compared to expectations for a C$ 5.35 billion rise.

November’s figure was revised to a C$ 4.30 billion increase from a previously estimated C$ 4.29 billion gain.

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